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Starbucks Tiers Program to Reward Loyal Customers

Starbucks is one of the largest coffeehouses internationally and in the U.S.A. The Street has ranked Starbucks reward program as one of the top consumer loyalty programs. According to the Coffee Science Information Centre, coffee is consumed by millions of people worldwide on a daily basis. In addition, more than half of the people that live in the United States of America drink coffee. According to the National Coffee Association of U.S.A., 56% of adults partake in the daily consumption of coffee beverages; with that, a new coffee trend has been emerging over the past several years. People aren’t just drinking any type of coffee, 40% of the coffee being sold is gourmet coffee. Starbucks is a company that is dedicated to serving quality coffee to its consumers and has helped emerge the trend of gourmet coffee. All of these different facts help support the reason why Starbucks has created a consumer reward program that meets the needs of every type of coffee drinker. The goal of this loyalty program is to recognize and reward loyal customers.

“The more you come into Starbucks, the more we’ll reward your loyalty” is the theme of “My Starbucks Rewards.” Starbucks feels that it is important to reward its customers and it is a way for Starbucks to “say thanks” for their customers coming to their stores. Every time that a consumer uses their Starbucks card to purchase a beverage, they will earn 1 star. As they collect more stars, they have the opportunity to move up in the reward levels and receive bigger benefits. Plus, it is free to sign up! This type of tiered loyalty program structure is designed to create aspirational momentum — a reason to give Starbucks greater share of wallet.

Starbuck’s Reward Levels:

1. Welcome Level – This level starts as soon as you register your Starbucks card. This level includes a “Free Birthday Beverage”, which is when Starbucks gives you a handcrafted drink of your choice for your special day.

2. Green level- You move up to the “Green Level” once you have earned 5 Stars. Once you have earned the 5 Stars, you are automatically enrolled in the “Green Level” and still receive “Welcome Level” rewards as well. With the “Green Level”, there are several different benefits:

  • Free select syrups and milk- When you purchase a beverage from the menu, you have the benefit of adding select syrups and milk to your beverage for free.
  • Free refill on brewed coffee or tea- When you pay with your Starbucks Card, you get brewed or iced coffee or tea refills at no charge. Starbucks wants to make you feel like you are at home during your visits and so they are offering this reward to create that type environment for you.
  • Free Beverage with whole bean purchase- When you buy 1 lb of whole bean coffee, you will receive a free tall (12 fl oz) beverage of your choice on the house. What a great deal!
  • Free trial offers- “We’ll make sure you are ‘in the know’ when it comes to new products we’re introducing in our coffeehouse”

3. Gold Level- 30 Stars collected will move you up to the “Gold Level” and increase your benefits for one year. If you earn another 30 Stars, in addition to your current Stars, that will keep you in the “Gold Level” for the following year. “As a special ‘thank you’, all registered Starbucks Gold cardholders will automatically start at this level…You will also receive all ‘Welcome’ and ‘Green Level’ rewards plus”:

    • Free drink every 15 Stars
  • Personalized Gold Card- You will receive a special Starbucks Card that recognizes you as a favorite customer
  • Personalized offers and coupons- Special offers tailored to things you like will be sent to you

An important aspect of the program is that customers can be downgraded from Gold to Green if they do not collect 30 Stars within 12 months. What do you think of this program strategy? Do you think customers understand you have to spend to continue to get special perks?